Three Ontario rehabilitation clinics convicted in auto insurance fraud cases

Three Toronto-area rehabilitation clinics have been convicted of several offences, resulting in maximum fines of $100,000 per conviction, the Insurance Bureau of Canada said Tuesday.

The convictions come after co-operative investigation efforts from IBC’s investigative services division, multiple insurers, police and the Financial Services Commission of Ontario (FSCO), IBC said in a news release.

Rick Dubin, vice president of investigative services with IBC said in a statement that he was “very encouraged” that the courts acknowledged the seriousness of the offences and imposed stiff penalties.

“Insurers were first alerted by IBC to allegations of medical service provider identity thefts in April 2010,” IBC said.

“Responses by many insurance companies identified widespread concerns involving multiple facilities. Ongoing communication between IBC and Toronto Police Service regarding suspected staged collisions eventually led to facility investigations being combined with staged loss investigations and resulted in Toronto Police launching ‘Project Whiplash.’”

The investigations were then extended to include FSCO, resulting in the convictions, while other Insurance Act and related criminal prosecutions remain before the courts, according to IBC.

As a result of the fraud, insurers paid out an estimated $4 million in fraudulent claims, IBC noted.

According to IBC, the convictions to date include:

McCowan Rehabilitation Clinic of Toronto was found guilty on counts of knowingly making a false or misleading statement to an auto insurer to obtain payment for goods and services provided to an insured and engaging in unfair or deceptive acts or practices.

The clinic was sentenced to the maximum fine at the time of the offence of $100,000 on each count. The Crown also asked for full restitution for the victim insurers. While the request was not entirely granted, a significant restitution order in excess was imposed of $120,000.

Physiotherapy Clinic of Scarborough faced similar charges. The registered company director at the time of the offence was Nishanthan Ponnuthurai. On behalf of the clinic, he pleaded guilty to making false statements and the company was fined $100,000.

North York Health and Rehabilitation of Toronto*, has also been convicted of similar charges and remains before the courts for sentencing.

In addition to the convictions for the clinics, the following individuals were also fined, according to IBC:

Sipaskaran Sabaratnam, a principal of Ontario Rehabilitation Clinic of Markham, entered a plea of guilty to a charge of failing to take reasonable care to prevent the company from making false statements to an insurer. He was assessed a $10,000 fine in accordance with the Insurance Act.

Nishanthan Ponnuthurai, a principal of Physiotherapy Clinic, was charged with failing to take reasonable care to prevent the company from making false statements to an insurer and failing to take reasonable care to prevent the company from engaging in unfair or deceptive acts or practices. He was assessed a $9,000 fine in accordance with the Insurance Act as a result of a guilty plea.

Jeyakanthan Theivendran, a principal of 2216686 Ontario Inc., operating as North York Health and Rehabilitation and as Ontario Rehabilitation Clinic, was charged with failing to take reasonable care to prevent the company from making false statements to an insurer and failing to take reasonable care to prevent the company from engaging in unfair or deceptive acts or practices. He was fined $5,000 in accordance with the Insurance Act as a result of a guilty plea.

*Editor’s Note: North York Rehabilitation Centre Corp., which is unaffiliated with the clinic convicted and referenced in the above article, has issued a clarification notice, noting that it operates in good standing. The full clarification notice is attached at the right.